If the older M* data and the more current AGG data are correct the problem of the long bonds is even worse than you think.

In any case you could use IShares GVI - Bar Cap Intermediate (1-10) Gov/Credit - with a duration of only 3.85 years. You would have to add an MBS fund like GNMA if you wanted mrotgage backed. (I don't.)

When I had a similar question, here was the response for the difference between Vanguard and Morningstar:

Langkawi wrote:Many of those bonds are VRDOs (variable rate demand obligations). These bonds have an interest rate that resets periodiocally. Each time it resets, the holder has the opportunity to redeem the bond to the issuer. Therefore, Vanguard considers the maturity of these bonds to be the time remaining until the next interest rate reset.

I have also seen this explanation:

dkturner wrote:Probably depends on how the person doing the calculating approaches mortgage pass through securities. One that doesn't have a firm grip on the concept of how a mortgage is amortized might classify a 30 year mortgage just like a 30 year Treasury bond, because that how time will pass before it goes away. When the guy in the next cubicle calculates the duration for this 30 year mortgage he tracks the actual cash flow and determines it has a duration of only, say, 7 years. We still haven't got to the guy in the third cubicle who adjusts the duration calculation for the impact of prepayment risk.

The question still remains, what is the real duration today, I would be happy to know within a year or two. I can understand that its going to move around a some but from I see here its seems to move a fair bit.

rkhusky wrote:When I had a similar question, here was the response for the difference between Vanguard and Morningstar:

Langkawi wrote:Many of those bonds are VRDOs (variable rate demand obligations). These bonds have an interest rate that resets periodiocally. Each time it resets, the holder has the opportunity to redeem the bond to the issuer. Therefore, Vanguard considers the maturity of these bonds to be the time remaining until the next interest rate reset.

I have also seen this explanation:

dkturner wrote:Probably depends on how the person doing the calculating approaches mortgage pass through securities. One that doesn't have a firm grip on the concept of how a mortgage is amortized might classify a 30 year mortgage just like a 30 year Treasury bond, because that how time will pass before it goes away. When the guy in the next cubicle calculates the duration for this 30 year mortgage he tracks the actual cash flow and determines it has a duration of only, say, 7 years. We still haven't got to the guy in the third cubicle who adjusts the duration calculation for the impact of prepayment risk.

I don't see a big difference: M* 4.97 as of 9/30/12 and Vg 5.2 as of 12/31/12.

dkturner wrote:Probably depends on how the person doing the calculating approaches mortgage pass through securities. One that doesn't have a firm grip on the concept of how a mortgage is amortized might classify a 30 year mortgage just like a 30 year Treasury bond, because that how time will pass before it goes away. When the guy in the next cubicle calculates the duration for this 30 year mortgage he tracks the actual cash flow and determines it has a duration of only, say, 7 years. We still haven't got to the guy in the third cubicle who adjusts the duration calculation for the impact of prepayment risk.

dkturner wrote:Probably depends on how the person doing the calculating approaches mortgage pass through securities. One that doesn't have a firm grip on the concept of how a mortgage is amortized might classify a 30 year mortgage just like a 30 year Treasury bond, because that how time will pass before it goes away. When the guy in the next cubicle calculates the duration for this 30 year mortgage he tracks the actual cash flow and determines it has a duration of only, say, 7 years. We still haven't got to the guy in the third cubicle who adjusts the duration calculation for the impact of prepayment risk.

And in between these two Vg reports is Morningstar data that originates with Vanguard that shows something very much different. It is obviously too large a difference to be a change in portfolio. There is an apparent difference in the calculation or maybe just an error. But the differences in various fund portfolios brought up in the other thread is based on all M* data. I am in the believe that the various funds provide M* with the raw data i.e. the holdings as stated in the semi and annual reports. The duration question is unrelated. There are various definitions of duration and some firms use one and some another but they are relatively close except when you have MBS involved and then they can be very different. In the OP Jay use the term "duration" but he really meant maturity profiles. The differences in the funds and the time frames when looking at the Vg data are about the amount of bonds with 20+ year maturities not duration or even "effective" average maturity. I don't think there are even enough MBS in the portfolio to make up the differences we see. M* will have updated there data in the next few weeks and then at least we can eliminate the time frame problem.

A scientist looks for THE answer to a problem, an engineer looks for AN answer. Investing is not a science.